In reporting its Q1 finances, Apple confirmed what analysts had feared. iPhone sales have slowed to the worst year-over-year growth ever, an occurrence that had already prompted investors to look beyond the world's most valuable company.
It was still a record quarter for Apple, according to the numbers and Apple CEO Tim Cook. Apple saw $75.9 billion in revenue for its first quarter and a net income of $18.4 billion, figures that were only a hair higher than analysts expected.
"Our team delivered Apple's biggest quarter ever, thanks to the world's most innovative products and all-time record sales of iPhone, Apple Watch and Apple TV," Cook says. "The growth of our Services business accelerated during the quarter to produce record results, and our installed base recently crossed a major milestone of 1 billion active devices."
Apple has ascended to its rank as the world's most valuable company on the backs of its iPhone line. Analysts, however, say the company will probably not generate much growth if it doesn't offer a new product soon enough or if it doesn't cut the iPhone's price for more customers in Southeast Asia, Africa and Latin America.
"If you want one, you probably have one for now," Gartner Research's Tuong Nguyen says of the iPhone. "If you don't, it's probably well out of your price range. They've hit their point where they have their users."
Now, with the sector saturated with iPhones and the smartphone market at large nearly satiated on smartphones, investors have been turning to Apple's rivals for growth.
Alphabet, the recently formed holdings company for Google, has steadily climbed back into contention with Apple and has been threatening to replace Cook's as the world's most valuable company. Apple was recently valued at about $562 billion and Alphabet wasn't far off with its $500 valuation.
Unlike the smartphone-reliant Apple, the majority of Alphabet's revenues come from ad dollars. Other tech companies such as Micrsoft, Facebook, Amazon and Netflix are heavily invested in virtual reality, social media, cloud computing and Internet streaming.
Apple's iPhone, meanwhile, accounts for about 60 percent of its revenues. With the launch of the iPhone 7 about three quarters away, Cook and company cautioned that one quarter isn't the best indicator of Apple's overall health.
"Especially during periods of economic uncertainty, it's important to appreciate that a significant portion of Apple's revenue occurs over time," Cook said, adding that the iPhone's popularity has provided the company with a "long-lasting foundation."
